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A report released today by the National Audit Office reveals that students at alternative higher education providers have claimed taxpayer-backed financial support that they were not entitled to.

The report Investigation into financial support for students at alternative higher education providers focused on four areas of concern:

Students at some alternative providers claiming support for which they are not eligible

Some providers recruiting students who do not have the capability or motivation to complete their courses

Some providers recruiting students in receipt of student support onto courses that the Department for Business, Innovation & Skills (BIS) had not approved; and

Some providers have given BIS inaccurate information about student attendance.

Investigation by the Department for Business, Innovation and Skills (BIS) and the Student Loans Company (SLC) found that at the end of October 2014, a total of 992 students from the EU who were ineligible for publicly funded support had already received £5.4 million from the Student Loans Company before payments to them were suspended.

Between 2010/11 and 2013/14 the number of students claiming student support for courses at alternative providers rose nearly eight-fold, from 7,000 to 53,000. In the same period, the total amount of public money paid to students at alternative providers, though tuition fee loans, maintenance loans and grants, has risen from around £50million to £675 million.

The report also highlights a worryingly high dropout rate. At alternative providers, dropout rates were higher than 20 per cent in 2012/13. This is far larger than the average dropout rate for the rest of the higher education sector which is 4 per cent.

A possible 20 per cent of Higher National students recruited by alternative providers and claiming student support may not have been registered with the qualification awarding body in 2012/13. As highlighted in the report, the SLC does not have powers to check that providers have registered students with an awarding body before making student support payments. There has been no investigation by the oversight bodies into this.

RT Hon Margaret Hodge MP, Chair of the Committee of Public Accounts made a statement on the report. “This extraordinary rate of expansion, high drop-out rates, and warnings from within the sector ought to have set alarm bells ringing.

As Government hands more and more taxpayers’ money to private companies and institutions to deliver services for the public good, we have to be able to follow the taxpayers’ pound wherever it is spent.

I look forward to hearing from the Department for Business, Innovation & Skills, the Student Loans Company and the Higher Education Funding Council for England on 15 December about how they are getting on top of this.”